Bill S6872B-2011

Relates to the refund to a consumer of money from a used car dealer for failing to correct a malfunction or defect

Establishes when a used car dealer has to refund a consumer his or her money for failing to correct a malfunction or defect as required by the warranty.

Details

Actions

  • Jun 21, 2012: referred to codes
  • Jun 21, 2012: DELIVERED TO ASSEMBLY
  • Jun 21, 2012: PASSED SENATE
  • Jun 18, 2012: AMENDED ON THIRD READING (T) 6872B
  • May 21, 2012: AMENDED ON THIRD READING 6872A
  • May 2, 2012: ADVANCED TO THIRD READING
  • May 1, 2012: 2ND REPORT CAL.
  • Apr 30, 2012: 1ST REPORT CAL.615
  • Apr 2, 2012: REFERRED TO CONSUMER PROTECTION

Votes

Memo

BILL NUMBER:S6872B

TITLE OF BILL: An act to amend the general business law and the executive law, in relation to the refund to a consumer of money from a used car dealership for failing to correct a malfunction or defect

PURPOSE OR GENERAL IDEA OF BILL: To include within the Used Car Lemon Law a similar provision to one that exists within the New Car Lemon Law.

SUMMARY OF SPECIFIC PROVISIONS: This bill amends paragraph 1 and subparagraph f of paragraph 3 of subdivision c of Section 198-b of the General Business Law to establish a mileage credit for cars that qualify under the Used Car Lemon Law.

JUSTIFICATION: On December 14, 2006 the Court of Appeals issued a decision in the combined cases of In the Matter of General Motors Corporation v. James Warner and In the Matter of Daimler Chrysler Corporation v. Eliot Spitzer. 7 N.Y.3d 653 that upheld the Attorney General's revised interpretation of the New Car Lemon Law. The Attorney General's new interpretation held that a consumer may be entitled to relief if, within the prescribed periods, four or more unsuccessful repair attempts were made or the vehicle was out of service for 30 days, notwithstanding that the condition complained of was subsequently repaired. Previously, a consumer would be eligible for a refund or replacement vehicle only when the purchaser could demonstrate that a defect still existed as of the date of arbitration. Similar provisions exist under the Used Car Lemon Law, except that only three or more repair attempts are required to qualify. A consumer has four years in which to bring an action under the Used Car Lemon law. At the oral arguments before the Court of Appeals, the issue was raised that a consumer could drive the car for significant period of time before filing an action, either because the car was repaired prior to the commencement of the action or because the defect which caused the car to qualify was not such that the car was unsafe or undriveable, thereby significantly altering the value of the vehicle once returned. The Attorney General's office indicated that the mileage credit formula in the New Car Lemon Law that reduces the amount which the consumer recoups upon return of the vehicle was a significant tool to prevent any attempted fraud. Such a mileage credit does not exist in the Used Car Lemon Law. This legislation would include in the Used Car Lemon Law this important anti-fraud measure that is necessary given the Court of Appeals decision.

PRIOR LEGISLATIVE HISTORY: New Bill.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect on the ninetieth day with provisions.


Text

STATE OF NEW YORK ________________________________________________________________________ 6872--B Cal. No. 615 IN SENATE April 2, 2012 ___________
Introduced by Sen. ZELDIN -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading -- again amended and ordered reprinted, retaining its place in the order of third reading AN ACT to amend the general business law and the executive law, in relation to the refund to a consumer of money from a used car dealer- ship for failing to correct a malfunction or defect THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph 1 of subdivision c of section 198-b of the gener- al business law, as amended by chapter 444 of the laws of 1989, is amended and a new paragraph 5 is added to read as follows: 1. If the dealer or his agent fails to correct a malfunction or defect as required by the warranty specified in this section which substantial- ly impairs the value of the used motor vehicle to the consumer after a reasonable period of time, the dealer shall accept return of the used motor vehicle from the consumer and refund to the consumer the full purchase price, or in the case of a lease contract all payments made under the contract, including sales or compensating use tax, less AN AMOUNT EQUAL TO A MILEAGE CREDIT ALLOWANCE AS CALCULATED PURSUANT TO THE METHODS SET FORTH IN PARAGRAPH FIVE OF THIS SUBDIVISION, FOR EACH MILE IN EXCESS OF THE WARRANTY MILEAGE APPLICABLE TO THE VEHICLE CONTAINED IN SUBDIVISION B OF THIS SECTION THAT THE VEHICLE HAS BEEN DRIVEN SINCE THE DATE OF DELIVERY OF SUCH VEHICLE BY THE DEALER TO THE CONSUMER, AND LESS a reasonable allowance for any damage not attributable to normal wear or usage, and adjustment for any modifications which either increase or decrease the market value of the vehicle or of the lease contract, and in the case of a lease contract, shall cancel all further payments due from the consumer under the lease contract. In determining the purchase price to be refunded or in determining all payments made under a lease contract to be refunded, the purchase price, or all payments made under a lease contract, shall be deemed equal to the sum of the actual cash
difference paid for the used motor vehicle, or for the lease contract, plus, if the dealer elects to not return any vehicles traded-in by the consumer, the wholesale value of any such traded-in vehicles as listed in the National Auto Dealers Association Used Car Guide, or such other guide as may be specified in regulations promulgated by the commissioner of motor vehicles, as adjusted for mileage, improvements, and any major physical or mechanical defects in the traded-in vehicle at the time of trade-in. The dealer selling or leasing the used motor vehicle shall deliver to the consumer a written notice including conspicuous language indicating that if the consumer should be entitled to a refund pursuant to this section, the value of any vehicle traded-in by the consumer, if the dealer elects to not return it to the consumer, for purposes of determining the amount of such refund will be determined by reference to the National Auto Dealers Association Used Car Guide wholesale value, or such other guide as may be approved by the commissioner of motor vehi- cles, as adjusted for mileage, improvements, and any major physical or mechanical defects, rather than the value listed in the sales contract. Refunds shall be made to the consumer and lienholder, if any, as their interests may appear on the records of ownership kept by the department of motor vehicles. If the amount to be refunded to the lienholder will be insufficient to discharge the lien, the dealer shall notify the consumer in writing by registered or certified mail that the consumer has thirty days to pay the lienholder the amount which, together with the amount to be refunded by the dealer, will be sufficient to discharge the lien. The notice to the consumer shall contain conspicuous language warning the consumer that failure to pay such funds to the lienholder within thirty days will terminate the dealer's obligation to provide a refund. If the consumer fails to make such payment within thirty days, the dealer shall have no further responsibility to provide a refund under this section. Alternatively, the dealer may elect to offer to replace the used motor vehicle with a comparably priced vehicle, with such adjustment in price as the parties may agree to. The consumer shall not be obligated to accept a replacement vehicle, but may instead elect to receive the refund provided under this section. It shall be an affir- mative defense to any claim under this section that: (a) The malfunction or defect does not substantially impair such value; or (b) The malfunction or defect is the result of abuse, neglect or unreasonable modifications or alterations of the used motor vehicle. 5. THE MILEAGE CREDIT ALLOWANCE AUTHORIZED BY PARAGRAPH ONE OF THIS SUBDIVISION SHALL BE EQUAL TO THE DEPRECIATION ADJUSTMENT FOR STANDARD MILEAGE RATE, AS PUBLISHED IN INTERNAL REVENUE SERVICE PUBLICATION FOUR HUNDRED SIXTY-THREE, APPLICABLE FOR THE SAME TAX YEAR, OR THE YEAR PRIOR TO IT, WHICHEVER IS LOWEST, IN WHICH THE CONSUMER PURCHASED OR LEASED THE VEHICLE FROM THE DEALER. IN THE EVENT THAT AN ARBITRATOR RENDERS A DECISION OR A TRIAL COURT RENDERS A JUDGMENT THAT DIRECTS THE DEALER TO ACCEPT RETURN OF THE VEHICLE, THE CONSUMER SHALL HAVE THE RIGHT TO RETURN THE VEHICLE TO THE DEALER'S PLACE OF BUSINESS ON THE FIRST BUSI- NESS DAY FOLLOWING SUCH DECISION UP TO AND INCLUSIVE OF THE THIRTIETH DAY, AND WITHIN NORMAL BUSINESS HOURS. WHETHER OR NOT THE DEALER ACCEPTS THE VEHICLE, THE DEALER AND CONSUMER SHALL COMPLETE AND SIGN A MILEAGE CREDIT CALCULATION FORM AS PUBLISHED BY THE ATTORNEY GENERAL, WHICH SHALL BE USED TO RECORD THE MILEAGE OF THE VEHICLE AT THE TIME OF DELIVERY OR ATTEMPTED DELIVERY. FOR THE PURPOSES OF THIS SECTION, THE MILEAGE CREDIT ALLOWANCE SHALL NOT BE APPLIED TO ANY MILES THAT THE VEHICLE HAS BEEN DRIVEN AFTER SUCH FORM IS SIGNED. IN THE EVENT THAT A
DEALER REFUSES TO SIGN SUCH FORM, THE EFFECTIVE MILEAGE CREDIT ALLOWANCE SHALL BE NO GREATER THAN THE SPECIFIC SUM WHICH WAS SET FORTH IN THE DECISION OF AN ARBITRATOR OR JUDGMENT OF THE TRIAL COURT. THE DEALER SHALL PROVIDE A COPY OF THE COMPLETED FORM, WHICH SHALL CONTAIN THE SIGNATURE OF THE DEALER AND CONSUMER ATTESTING TO THE ODOMETER READING OF THE MOTOR VEHICLE, TO: THE ARBITRATOR OR COURT THAT RENDERED THE DECISION OR JUDGMENT; AND, AT NO CHARGE, THE CONSUMER. S 2. The opening paragraph of paragraph 1 of subdivision f of section 198-b of the general business law, as separately amended by chapters 444 and 609 of the laws of 1989, is amended to read as follows: If a dealer has established or participates in an informal dispute settlement procedure which complies in all respects with the provisions of part seven hundred three of title sixteen of the code of federal regulations the provisions of this article concerning refunds or replacement shall not apply to any consumer who has not first resorted to such procedure. Dealers utilizing informal dispute settlement proce- dures pursuant to this subdivision shall insure that arbitrators partic- ipating in such informal dispute settlement procedures are familiar with the provisions of this section and shall provide to arbitrators and consumers who seek arbitration a copy of the provisions of this section AND THE APPLICABLE MILEAGE CREDIT ALLOWANCE RATE AS CALCULATED PURSUANT TO THE METHOD SET FORTH IN PARAGRAPH FIVE OF SUBDIVISION C OF THIS SECTION, together with the following notice in conspicuous ten point bold face type: S 3. Subparagraphs 5 and 6 of paragraph 1 of subdivision f of section 198-b of the general business law, as separately amended by chapters 444 and 609 of the laws of 1989, are amended to read as follows: 5. If the same problem cannot be repaired after three or more attempts, you are entitled to return the car and receive a refund of your purchase price or of all payments made under your lease contract, and of sales tax and fees, minus THE MILEAGE CREDIT ALLOWANCE FOR EACH MILE IN EXCESS OF THE WARRANTY MILEAGE APPLICABLE TO THE VEHICLE CONTAINED IN SUBDIVISION B OF THIS SECTION THAT THE VEHICLE HAS BEEN DRIVEN SINCE THE DATE OF DELIVERY OF SUCH VEHICLE BY THE DEALER TO THE CONSUMER, AND LESS a reasonable allowance for any damage not attribut- able to normal usage or wear, and, in the case of a lease contract, a cancellation of all further payments you are otherwise required to make under the lease contract. 6. If your car is out of service to repair a problem for a total of fifteen days or more during the warranty period you are entitled to return the car and receive a refund of your purchase price or of all payments made under your lease contract, and of sales tax and fees, minus THE MILEAGE CREDIT ALLOWANCE FOR EACH MILE IN EXCESS OF THE WARRANTY MILEAGE APPLICABLE TO THE VEHICLE CONTAINED IN SUBDIVISION B OF THIS SECTION THAT THE VEHICLE HAS BEEN DRIVEN SINCE THE DATE OF DELIVERY OF SUCH VEHICLE BY THE DEALER TO THE CONSUMER, AND LESS a reasonable allowance for any damage not attributable to normal usage or wear, and, in the case of a lease contract, a cancellation of all further payments you are otherwise required to make under the lease contract. S 4. Subparagraphs 7, 8, 9, 10 and 11 of paragraph 1 of subdivision f of section 198-b of the general business law are renumbered subpara- graphs 8, 9, 10, 11 and 12 and a new subparagraph 7 is added to read as follows: 7. THE MILEAGE CREDIT ALLOWANCE DESCRIBED IN PARAGRAPHS FIVE AND SIX OF THIS SUBDIVISION SHALL BE CALCULATED PURSUANT TO THE METHOD ESTAB- LISHED IN PARAGRAPH FIVE OF SUBDIVISION C OF THIS SECTION. THE MILEAGE
CREDIT ALLOWANCE SHALL BE NO GREATER THAN (INSERT THE DEPRECIATION ADJUSTMENT FOR STANDARD MILEAGE RATE, AS PUBLISHED IN INTERNAL REVENUE SERVICE PUBLICATION FOUR HUNDRED SIXTY-THREE, APPLICABLE FOR THE SAME TAX YEAR, OR THE YEAR PRIOR TO IT, WHICHEVER IS LOWEST, IN WHICH THE CONSUMER PURCHASED OR LEASED THE VEHICLE FROM THE DEALER) CENTS PER MILE. S 5. Paragraphs 4, 5 and 6 of subdivision f of section 198-b of the general business law are renumbered paragraphs 5, 6 and 7 and a new paragraph 4 is added to read as follows: 4. IN THE EVENT THAT AN ARBITRATOR OR TRIAL COURT RENDERS A DECISION THAT DIRECTS THE DEALER TO ACCEPT RETURN OF THE VEHICLE, THE ARBITRATOR OR COURT SHALL, UPON RENDERING SUCH DECISION, PROVIDE THE FOLLOWING NOTICE TO THE CONSUMER ON A SEPARATE WRITING AND IN AT LEAST TWELVE POINT BOLD FONT: AS A PREVAILING CONSUMER YOU HAVE THE RIGHT TO RETURN THE VEHICLE TO THE DEALER'S PLACE OF BUSINESS ON THE FIRST BUSINESS DAY FOLLOWING THIS DECISION AND UP TO AND INCLUSIVE OF THE THIRTIETH DAY (WITHIN NORMAL BUSINESS HOURS). WHETHER OR NOT THE DEALER ACCEPTS THE VEHICLE, YOU AND THE DEALER SHALL COMPLETE AND SIGN A MILEAGE CREDIT CALCULATION FORM. YOU ARE NOT RESPONSIBLE FOR ANY MILEAGE ACCRUED WHILE YOU ARE LAWFULLY USING THE VEHICLE DURING AN APPEAL THAT A DEALER BRINGS TO VACATE OR MODIFY AN ARBITRATOR'S DECISION OR A TRIAL COURT JUDGMENT. S 6. Section 63 of the executive law is amended by adding a new subdi- vision 16 to read as follows: 16. PROMULGATE REGULATIONS PROVIDING FOR THE CREATION AND PUBLICATION OF A MILEAGE CREDIT CALCULATION FORM TO BE USED BY CONSUMERS AND DEALERS PURSUANT TO SECTION ONE HUNDRED NINETY-EIGHT-B OF THE GENERAL BUSINESS LAW. SUCH FORM SHALL BE MADE AVAILABLE TO DEALERS BY THE DEPARTMENT ON ITS WEBSITE. S 7. This act shall take effect on the ninetieth day after it shall have become a law; provided, however, that the provisions of this act shall not apply to any contract executed prior to the effective date of this act; provided, further, that effective immediately, the department of law shall publish on its website on or before such effective date the mileage credit calculation form, as described in section one of this act, that is to be used by consumers and dealers in the manner set forth in such section, with such form, including instructions, necessary for the proper completion of such form by a dealer.

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